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- GDP (PPP):
- $22.0 billion
- 5.6% growth
- 5.1% 5-year compound annual growth
- $1,466 per capita
- Inflation (CPI):
- FDI Inflow:
Burkina Faso’s economic freedom score is 59.9, making its economy the 86th freest in the 2013 Index. Its overall score has decreased by 0.7 point since last year due to declines in half of the 10 economic freedoms including freedom from corruption, labor freedom, and the management of government spending. Burkina Faso is ranked 10th out of 46 countries in the Sub-Saharan Africa region, and its overall score is above the world average.
Burkina Faso had been on an upward trend in the Index in recent years. Notable progress in advancing economic freedom was accompanied by annual growth rates averaging over 5 percent. Regulatory reforms that include simplification of the business start-up process led to increased efficiency and have facilitated modest private- sector growth.
However, deeper structural and institutional reforms are critically needed to maintain stability, diversify the production base, and ensure long-term economic development. Systemic weaknesses in the protection of property rights, exacerbated by an inefficient judicial system that remains vulnerable to political influence, hinder the development of a more dynamic entrepreneurial environment. Little progress has been achieved in the fight against corruption.
Burkina Faso achieved independence in 1960 and was subject to military coups throughout the 1970s and 1980s. Blaise Compaoré seized power in 1987 and has remained head of state since then. A constitutional amendment that would limit any president to two terms has been ruled not to apply to him. Army revolts and mass protests contributed to a highly unstable political climate in 2011, but order has been restored. In March 2012, the ruling party granted amnesty to Compaoré and previous heads of state who came to power through coups. Burkina Faso is one of the world’s poorest countries, and approximately 90 percent of the population relies on subsistence agriculture. Drought, poor soil, lack of adequate infrastructure, a low literacy rate, and an economy that is vulnerable to external shocks are long-standing problems.
The judicial system is weak. The executive has extensive appointment and other judicial powers. Systemic problems include arbitrary removal of judges, outdated legal codes, a lack of financial and human resources, and excessive legal costs. Two reports in early 2012 by a special parliamentary commission cited many cases of overspending, misused funds, irregular bidding, and tardy work, some of which raised “serious suspicions of corruption.”
The top income and corporate tax rates are 30 percent. Other taxes include a value-added tax (VAT). The overall tax burden amounts to 7.8 percent of total domestic income. Government spending has risen to 24.5 percent of GDP. Public debt remains below 30 percent of GDP but has been increasing in recent years. Excessive dependence on gold exports to finance oil imports threatens fiscal health.
Establishing a business has become less time-consuming and requires fewer than five procedures. The overall regulatory framework has improved somewhat, but the formal labor market remains underdeveloped. The private sector consists primarily of a large informal economy that remains the main source of employment. Inflation has been rising. The state maintains price supports for cotton and influences other prices through the public sector.
The trade-weighted tariff rate is 8.8 percent, and significant non-tariff barriers raise the cost of trade. Investment laws guarantee equal treatment of foreign and domestic investors in theory but are enforced unevenly. The government has pursued banking liberalization and restructuring, encouraging competition in the financial sector. However, the banking sector remains underdeveloped, providing a low level of access to banking services.